Feds Confiscate Record $29 Million BitCoin Booty From Dread Pirate's Hard Drive

Tyler Durden's picture

When three weeks ago, the FBI arrested Ross William Ulbricht - the creator of the now shutdown Bitcoin-only "alternative" marketplace Silk Road also known as Dread Pirate Roberts, some were surprised that the Feds only confiscated about $3.6 million worth in Bitcoins from Ulbrecht. Proving all doubters wrong, and that creating the first "libertarian" marketplace not subject to any rules and regulations, not to mention fiat monetary constraints, actually does pay quite well, moments ago it was revealed that Federal prosecutors had found an additional $29 million, or 144,336 BitCoins, belonging to the Dread Pirate. According to Reuters, the booty was discovered on "computer hardware" belonging to Ulbricht. The repossessed electronic money, whose encryption technologies seem to leave a bit to be desired, has now been impounded and will likely remain on the FBI's hard disks indefinitely.

More:

Authorities said the haul represented the largest ever Bitcoin seizure.

 

Ulbricht's lawyer could not be contacted on Friday evening (local time), but had previously told reporters his client denied the charges.

 

The currency, which has been in existence since 2008, first came under scrutiny by law enforcement officials in mid-2011 after media reports surfaced linking bitcoins to Silk Road.

 

The US Attorney's Office said with nearly 30,000 bitcoins previously seized, federal agents have now collected more than $US33 million in bitcoins based on current value.

 

Ulbricht is due to appear in court within weeks to face criminal charges of narcotics trafficking conspiracy, computer hacking conspiracy and money laundering conspiracy.

It remains to be seen if the Dread Pirate will be able to transact in prison using BitCoins. It also remains to be seen if leading hedge fund/PE firms such as Fortress, which recently voiced its support for BitCoin, will step in to fill the void left by Ulbricht's arrest realizing the great monetary potential - in either USD or BTC terms - to be reaped by providing the masses with what is a truly anonymous marketplace.

Finally, for those who missed it the first time, here is some additional information on the identity and motivation of the Ulbricht:

Who is the Dread Pirate Roberts?

The court documents described Mr Ulbricht, 29, as a former physics student at the University of Texas, who had gone on to study at the University of Pennsylvania between 2006 and 2010.

 

It was here, according to Mr Ulbricht's LinkedIn profile, as quoted by court documents, that his "'goals' subsequently 'shifted'".

 

He wrote on the social network that he had wanted to "give people a first-hand experience of what it would be like to live in a world without the systemic use of force" by "institutions and governments".

 

Authorities said he took to online forums to publicise Silk Road as a potential marketplace for drugs back in January 2011.

 

In one such message, a user believed to be Mr Ulbricht allegedly said: "Has anyone seen Silk Road yet? It's kind of like an anonymous Amazon.com."

 

Investigators said he used the same channels months later to recruit help - starting with a search for an "IT pro in the Bitcoin community".

 

The FBI said Mr Ulbricht would appear in San Francisco federal court later on Wednesday.

And more from NYMag:

The dark Internet's favorite massive drug marketplace, Silk Road, was shut down by the FBI last night and its alleged mastermind arrested on an array of colorful charges after a nearly two-year undercover operation.

 

Twenty-nine-year-old Ross Ulbricht, a.k.a. "Dread Pirate Roberts," was picked up in San Francisco and accused of running the underground e-warehouse while allegedly laundering money, trafficking narcotics, and even hiring a hit man to kill one of the site's users. Fittingly for a computer nerd, not a Heisenberg, he left a rich personal trail online.

 

According to the federal complaint, filed in the Southern District of New York, "Silk Road has emerged as the most sophisticated and extensive criminal marketplace on the Internet today," enabling "several thousand drug dealers" to move "hundreds of kilograms of illegal drugs." The site's sales totaled about $1.2 billion in the form of 9.5 million Bitcoins (naturally). About $3.6 million in the Internet currency has been seized.

 

Ulbricht, though, wasn't exactly great at covering his tracks, attaching his name, photo, and personal e-mail address to Silk Road business, eventually resulting in his arrest.

...

Last year on his Google+ account, Ulbricht, who's now charged with facilitating the sale of drugs through the mail, asked, "Anybody know someone that works for UPS, FedEX, or DHL?"

...

On YouTube, Ulbricht ("ohyeaross") liked videos by Ron Paul, along with clips called "The Market for Security" and "How to Get Away With Stealing." (Of Paul, Ulbricht once told his Penn State Univeristy paper, "There's a lot to learn from him and his message of what it means to be a U.S. citizen and what it means to be a free individual.") Most recently, he followed the Vice channel.

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CH1's picture

God bless this guy.

He made errors (that's how he got caught, not by NSA supercomputers), but so have we all.

And I'm not willing to take the FBI's wilder acusations on faith. They are liars, 24/7.

THX 1178's picture

Check out SocraticDiscourse's response on the idea that revolution could never happen in America.

http://www.reddit.com/r/politics/comments/1p6u1i/300_americans_have_the_...

Harlequin001's picture

Ooops, oh fuck...

Where's my money?

nope-1004's picture

There is a clear trend here for anyone trying to use, sell, exchange, or compensate in anything other than the USD. Kinda obvious, no?

That is why the corruption, war mongering, and idiotic behavior from our Dear Leader and the administration in bed with the large banks will not change until a foreign nation tells the broke US to go pound sand. And it's coming, because a consumer-only economy that is fully tapped out and awaits only for retirement redemptions is of no value to someone like China.

synergize's picture

The makers of bitcoin mean well but its going to collapse. Forget Bitcoin and buy the true free-man's currency GOLD (and SILVER).

 

PS - the Chinese, Russians, Turks, Indians, and Saudis are...

 

---------------------

If you are fed up with whats happening with the government - it all stems from one major thing: the government's control of our money.  We have placed in our government the ability to control the money supply and dish out new money to whomever they please (usually their cronies and the banks) and to spend and create that money in infinite amounts to SUPPRESS we, the People.

To break this system we have to bring back real money and thus limit government control over money and our lives.  We can break the system by overwhelming the physical markets and give a no-vote to their control over money - they key is the small silver market.

Join the Silver Pledge - an effort to change the system by having investors join up and buy physical silver - together we can break this market and take back our government.

You can read more here:

http://www.communitysynergy.com/subscribe/silver_pledge_site.html

If you dont like it dont sign up - but for people who are sick of sitting and doing nothing at least lets work together to BREAK this silver market

fonestar's picture

Tyler writes, "The repossessed electronic money, whose encryption technologies seem to leave a bit to be desired.."

So was the problem with Bitcoin's encryption, or the fact that DPR was not using full-disk encryption?  Nice cheap shot Tyler.

Urban Redneck's picture

That's just as presumptive, we don't know what type of security he used on his wallet.

What we do know is they've had the BOY in custody for three weeks...

And it's VERY easy to ascertain the validity of extracted information, if you're "asking" for the key to open a lock that is already in your possession.

There is NO encryption technology that works against those methods, except not possessing all the keys to required to open the lock.

The basic tried & true decades old local PD methods are probably enough to get them what they sought - and at the other end of the spectrum the US government has admitted to 1) disappearing people into prisons 2) operating disappearing prisons and mobile prisons 3) disappearing interrogation evidence and 4) disappearing bodies from "custody"

Karlus's picture

The only true protection is anonymity: having one face for the world, another for your self (See: "I am Sparticus")

 

Now, I would agree over time oppression tends to erode the ability to remain "private" but it is true that if they cant pick you out of a crowd, they cant see your finances, cant track your transactions you can still exert some degree of freedom.

 

I believe that widespread use of encryption is around the corner. People (and other countries) will demand it. Its fine for the NSA to collect all of the info, but if it takes 10^6 years to decrypt my LOLCat email then it throws a wrench in the works.

Even if they legislate against encryption and criminalize it, it will not stop (See: P1r4te-84y)

 

Oh, and F the Police!

 

Urban Redneck's picture

"picking someone out of the crowd" is exactly the purpose of metadata and pattern matching algos - pulling a two-face routine off successfully requires rare discipline and an unnatural commitment to schizophrenia and ocd.

Pairadimes's picture

Besides the gold the federal government would like you to believe they still possess, this is probably the only thing they have ever possessed that has actually increased in value after they took it.

knukles's picture

The problem with BitCoin is that no central banks utilize it as they do fiat and gold.
Duh.

So secure a caveman can do it.

Non Passaran's picture

Congrats, you just discovered that Bitcoin is a currency while the 2 PMs are money. No wonder they're not being used the same way.

(And as someone said above, Bitcoin isn't used the same way (in any way) by the govt because it can't be inflated and BTC transactions can't be taxed).

Karlus's picture

"two-face routine off successfully requires rare discipline and an unnatural commitment to schizophrenia and ocd" I think you prob just described the typical ZH reader. Gentle reader, I didnt mean literally walking to Kroger in a Guy Fawkes mask.

We all have different personas for different people. By day, I work at a financial institution, but by night I transform into GoldMember. See what I did there?

During the day, I am a paragon of civic responsibility, but by night I walk in my batcave full of 5.56

The point I am making is you never know who you really are talking to. If we are truly anonymous and have the means to remain so, then you are free.

Quus Ant's picture

The point I am making is you never know who you really are talking to. If we are truly anonymous and have the means to remain so, then you are free.

 

Not my definition of freedom. 

When action agrees with thought and thought with feeling that is freedom/authenticity-

impossible in a compartmentalized existence.

 

Dr. Everett V. Scott's picture

Only 144,336 BitCoins confiscated, out of 9,500,000?

 

Why don't they have access to all of them?  Does this mean BitCoin encryption is working?

Bunga Bunga's picture

Blockchain is still running, people are doing transactions, so nothing has been cracked.

 

Radical Marijuana's picture

Since money is measurement backed by murder, BitCoins were ONLY able to operate covertly, cryptographically, within the established murder systems. Without some force to defeat the USA's militarized police, then BitCoin users have nothing else than their ability to hide, and to operate covertly through already established social systems. (Of course, there is no sane force that could survive defeating the USA's militarized police.)

That is the universal problem with all idealized or nostalgic notions about "money," such as that there could be sound and honest money based upon commodities, which would be connected to the natural principle of the conservation of matter, like gold or silver. Gold or silver based money is merely the measurement of gold or silver, backed by murder. Similarly any other basket of currencies, more or less connected to any commodities, always traces back to the sovereign powers to rob and to kill, in order to make that money meaningful.

Ross William Ulbricht's Background Summary expressed some classic impossible ideals, which then necessarily resulted in the opposite effects in the real world. Slavery did not end. Slavery merely became more sophisticated, with debt slavery becoming the system within which everyone was forced to operate.

The PROBLEM is that the globalized systems of electronic money, backed by atomic bombs, are trillions of times BIGGER than the minds of the individual human beings that originally made and maintain those systems. BitCoin enthusiasts, like gold bugs, etc., are romantically delusional, in their desires that money could be anything else than measurement backed by murder. OUR REAL PROBLEMS ARE TRILLIONS OF TIMES WORSE THAN ANY KNOWN SOLUTIONS!

booboo's picture

Maybe the "open letter" writer to Russell Brand should pay attention to this cause Comrade Brand would not keep these confiscated Bitcoins on his Ministry of Confiscation's hard drive he would Massivly Redistribute them, which is a moar better so they could buy moar smack and vote for "I don't know".

Ranger4564's picture

GorillaWarfare actually has the better understanding. Until people overcome their complacency and apathy, there is no chance. But the amazing genius of those who plan is that they planned for uprisings and built the infrastructure to cope with most of it. I'm sure TPTB are surprised there hasn't been more activity globally or locally, but they underestimated the extent to which evryne has been conditioned to cowardice.

Revolution my ass, people can't even bother to participate in peaceful protest.

These expressions of faux courage fool no one actually, so I'll leave this convo to the willful.

McMolotov's picture

But the amazing genius of those who plan is that they planned for uprisings and built the infrastructure to cope with most of it.

"Everybody has a plan until they get punched in the face." —Mike Tyson, political philosopher

CH1's picture

the amazing genius of those who plan

The overlords are NOT that smart. If they were, they would have killed the Internet in 1989.

fonestar's picture

Supposing the feds get the password to his wallet.dat file it will be interesting to see if they dump all the Bitcoins early in the morning on light trading.

fockewulf190's picture

I wonder what would happen if Bitcoins could only be bought with physical gold and silver and not with any fiat currency.  Bitcoins backed by phyzz.  That would be explosive.

Non Passaran's picture

... And as long as gold and silver could still be bought with fiat, there'd be no difference. Nice try.

Martian Moon's picture

The internet is a double edged sword, TPTB need it but it is causing them the greatest harm

Some form of the internet is essential to implement the total control grid

Where TPTB were stunned was how fast peer to peer information transfer led to a total unravelling of their packaged whitewashed propagandized spiel (They had more of a top down version in mind 1984 style)

 

Herd Redirection Committee's picture

They figured as long as they told people to not trust anything on the internet, and not give out personal information on the web, they could still control the flow of information.

Their problem was that sites on Geocities gave more comprehensive coverage to events like the OKC bombing than the MSM did!  And it didn't take people long to figure out who it was they actually couldn't trust.  The talking heads.

Ranger4564's picture

They are nonetheless achieving their top down, thanks to the complicity of the profiteering corporations. What sucks about all of this, I mean ALL OF THIS, is that WE PAID FOR ALL OF IT. They didn't pay for any of it. We did. Damn that really sickens me.

THECOMINGDEPRESSION's picture

The overlords are NOT that smart. If they were, they would have killed the Internet in 1989.

 

How would they what the serfs are doing then?

TORNasunder's picture

I must respectively disagree. The Internet as we now know it was originally a US defense project. Which means they knew before it went 'public' just what kind of surveillance and control tool it was. How many people pre-Snowden would have believed you if you'd told them they are regularly being spied on through their computer? Most would have said you're crazy or paranoid. The question now is not 'If' you're being spied on but by how many different groups(local), organizations(national), and nations(international) are, and how are they or could they use this to manipulate/control you?

Make no mistake the Internet is a two-edged sword, and it has created problems for TPTB, but at this point it appears the benefits still outweigh the costs. When that relationship flip-flops is the day the Internet is no longer a free speech zone and sites like ZH go dark.

As for Revolution... I know one thing history teaches about revolutions; large masses of hungry people tend to revolt.

EDIT: Martian Moon beat me to the punch.

Karlus's picture

"The overlords are NOT that smart." - Pizzactly!!

Look at who is running the show. Yes, they have a big stick, but are none too bright in wielding it.

 

The most feared animal in the jungle is not the lion or Super Cobra. Its the Army Ant. When thousands of rednecks point their F150s towards DC, it will be over in days.

At the end of the day, govt is an irritant. When it really becomes a true threat, "Rough Men will do violence" on their own behalf very quickly. (See: Interstate highways and distance from Texas to DC)

Wahooo's picture

Why would they have killed the Internet? It's the perfect prison. Just now, I am conversing with my fellow inmates.

drooley's picture

the poor have the rich outnumbered, outgunned, and dare i say outsmarted.

ElvisDog's picture

Don't be stupid, the poor always have the rich outnumbered and outgunned. Usually, the rich can keep a lid on things. Occasionally, 1789 Paris, 1917 St Petersburg, things get out of hand.

booboo's picture

Yes and when they do the poor plebes were in both cases were talked into rounding up what was left of the middle class. Pol Pot demonstrated this effectivly by slaughtering anyone who could read and write, wearing glasses was a dead give away and the "Killing Fields" were littered with people sporting a 123 grain bullet hole in the back of their head. They called them useful idiots for a reason, but even the intellectuals were wiped out in all cases when the top perceived them as a threat. Trust me, they ain't gonna stop at bankers and politicians.

Herd Redirection Committee's picture

I call it the Thermidorean Reaction Redux.  People aren't YET educated well enough to even know what the desirable outcome of a revolution is!

Kirk2NCC1701's picture

Ah, but the rich have a failsafe secret weapon: Organized Religion.

"Religion is what keeps the poor from murdering the rich." - Diderot

Oracle 911's picture

Well it is much likely bunch of organized interlapping cults then a religion, BUT close enough.

Urban Roman's picture

EBT cards are a religion? I never knew ...

McMolotov's picture

His name is Ross Ulbricht... His name is Ross Ulbricht... His name is Ross Ulbricht...

diesheepledie's picture

Call me pessimistic, but I am guessing that I'm never going to receive my order of "Nos's Awesome Columbian White". This sucks ...

thunderchief's picture

Where would tyranny be without a war on drugs. Especially in the worlds number one drug consuming country.

booboo's picture

Since the War on Drugs, Poverty, Obesity, and the rest of the declared wars on behavior have had the opposite effect I call for a war on sex. Brace yourself men for the onslaught of free and plenitful cootchy.

Diogenes's picture

It was called Women's Liberation and resulted in them joining the debt slaves. Those who refused to be dictated to, got jobs as stenographers. Those who refused to settle for one man, ended up with none.

thatthingcanfly's picture

I refuse to see this glorified drug peddler as some kind of hero.

flacorps's picture

He was interfering with a government monopoly.

Harlequin001's picture

His only crime seems to be that he didn't work for HSBC or JP Morgan...

1stepcloser's picture

So if we want to launder money, we should use our local JP Morgan branch and not bitcoin.  Got it